FX.co ★ Europe Sells Bitcoin and Wall Street Invests in Solana: Cryptocurrency Market Uncertainty

The global stock markets do not demonstrate a uniform model of behavior during the correction of the cryptocurrency market. If in Europe investors prefer to sell digital assets during a price decline, in the U.S. it is seen as an opportunity to buy coins at favorable prices. The main problem with the difference in the views of investors is that it negatively affects the cryptocurrency market in general, but in particular, contributes to the development of specific projects.

Investor's Favorite

One of the clear winners during the market correction is the Solana project, which updated the local minimum at $150. After another update of the historical maximum at $260, the coin entered the consolidation stage. Subsequently, a "head and shoulders" pattern was formed on the charts, which contributed to the trend reversal.

As a result, the price of the cryptocurrency sank to a local minimum of $150, where the key support zone passes. It is impossible to be sure that the altcoin has made a final downward spurt, since the potential for price movement is equal to the "head and shoulders" pattern, according to which quotes can drop to the $130 area.

Investors met with great interest the fall in SOL/USD quotes and used it as a profitable entry point into the asset. In addition, the Solana project continues to develop its ecosystem: on December 14, it became known that Deel, which provides a platform for remote employment, added support for payments to SOL.

The local minimum prices are used by investment giants from Wall Street, who have invested more than $24 million in Solana-based projects over the past month. The inflow of investments over the past week amounted to more than 76% of the monthly capital, which indicates a growing interest in the Solana ecosystem.

Bitcoin raises doubts

Bitcoin also received investment returns, but on a more modest scale than usual. Over the week, funds based on BTC have replenished by $51 million, and the monthly inflow amounted to $88 million. At the same time, there is uncertainty among investors regarding Bitcoin.

While European traders see the fall in prices as a harbinger of a bear market and sell BTC, in North America, on the contrary, they are buying additional volumes of coins and preparing for a rally in early 2022. However, I would like to point out that such investor uncertainty will provoke a protracted period of accumulation, which will negatively affect Bitcoin and the market as a whole.

In addition, it is important to understand that Santiment has recorded large profit-taking operations by "whales." All of this puts pressure on the price. At the same time, on December 13, 90% of BTC of the entire emission was mined, and the hash rate came close to ATH.

All this negatively affects the value of Bitcoin, and given the additional volumes after the sale and profit-taking, it can be assumed that the period of accumulation and fluctuations in a certain range will take at least a month.

What will happen to BTC/USD?

A further decline in bitcoin, which maintains the dynamics of following the local downward trend, may become alarming news for the market. The asset came close to the final support point near $45.7k. And there is every reason to believe that the market will move even lower, to a local bottom.

First of all, this is indicated by the ratio of longs and shorts, where more than 70% is long. Taking into account recent events, this is fraught with another squeeze, where long positions will be thwarted, and only then the cryptocurrency will bounce above $45k. In addition to a large-scale liquidation, this can aggravate the emerging trend towards the sale of coins and the fragmentation of the main audience of BTC investors.

Given the current market situation and with a possible $42k retest in mind, I suppose that a full-fledged upward movement to new highs should not be expected until the middle of the first quarter of 2022.